Point systems stir privacy fears among Net users

The battle for point card supremacy in loyalty programs is hotting up across the country, causing consumers to express concern over privacy issues as a growing number of companies get in on the act.

Franchises have been running loyalty programs for more than a decade now, with Culture Convenience Club Co.’s T Card proving the most popular. Culture Convenience Club operates the nation’s largest video rental store Tsutaya. Other members of the T Card group include convenience store operator Family Mart, gas station Eneos, family restaurant Skylark, drugstore Welsia and cellphone carrier Softbank. Customers can use their T Cards to accumulate “T Points” at any of the above locations. The points on such loyalty programs are typically equivalent to 0.5 to 1 percent of customer purchases. They can be used to reduce the cost of subsequent purchases at member shops.

The industry got a massive shot in the arm in July 2012 on the back of news that Culture Convenience Club had joined forces with web titan Yahoo Japan. Account holders at Yahoo Japan were merged with T Card holders, which despite some duplication increased the number of potential users in the program to 66 million. (At the moment, some 40 million people are members of the T Card program.)

Last summer, Toshiba joined the loyalty program and invited purchasers of its Regza television sets to register their T Card memberships and earn points for watching a select number of recommended programs. Culture Convenience Club gained valuable insight into consumer behavior through the scheme.

Things turned on their head on New Year’s Day, with a screenshot of a large banner ad on a Regza TV set soliciting use of a built-in “T Point” connection feature going viral after it was posted on Twitter.

The Twitter user complained that the appearance of such a large banner ad interfered with watching TV — a gripe that spread quickly through social media networks. Others agreed, drawing a distinction between such ads and Internet services such as YouTube that are supported by advertising. If consumers pay a lot of money to own a new TV, why should they be subjected to additional advertising?

Upon subsequent investigation, the original complaint overstated the problem, suggesting that all users were subjected to the advertising until they registered their T Card membership information. This isn’t the case, however — the ad only appears on TVs that are connected to the Internet. Also, the large banner ad only appears if a Regza user clicks on a much smaller notification in the corner, which appears once every few days or so.

Toshiba updated the FAQ section on the company’s website on Jan. 1, giving consumers instructions on how to turn off the notification through their television settings. Toshiba also told consumers it planned to fix the complaint in a future update and suppress the ad when the TV is connected to an external input such as a game console. It is impossible to disconnect the Regza TV to the “T Point” information, but overall the feature isn’t quite so irritating as the Twitter post made out.

However, the viral nature of the complaints highlights the ill feeling some Net-savvy consumers have against such a loyalty program. They claim large companies are acquiring too much personal information from consumers, and are sharing this information too easily with other companies in the group.

Groups in the T Card program are not the only companies that face such complaints. Starting in 2010, the Ponta Card program has managed to attract video franchise Geo, convenience store operator Lawson and fast-food outlet Kentucky Fried Chicken. In spring, it is expected to add Recruit, which holds a number of large Web services for employment, housing, automobiles and hotels. In October last year, online retailer Rakuten joined the party with the launch of its R Point Card, expanding its “super points” to retail items. Other members of the group include convenience store operator Circle K Sunkus Co., gas retailer Idemitsu and fast-food franchise Mister Donut. Several companies on the Internet belong to all three alliances, seeking to analyze purchase records for marketing. These firms are already issuing personalized coupons that send customers to other member stores.

The government has been trying to draw up guidelines that ensure large firms keep consumer data private, an issue that is becoming increasingly necessary with the growth of networked home appliances. Internet-connected appliances need to be “smart,” but vendors should be kept out of the equation.

Akky Akimoto is a Japanese blogger for Asiajin and Cybozu. His Twitter @akky has about 120,000 followers.